X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 3 hours U.S. Presidential Elections Status - Electoral Votes
  • 6 hours Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants
  • 2 days Interest article about windmills and waterwheels in Europe
  • 2 hours Good Marriage And Bad Divorce: Germany's Merkel Wants Britain and EU To Divorce On Good Terms
  • 17 hours Retired RAF pilot wins legal challenge over a wind farm
  • 2 days “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 2 days Chance for (Saudi)Arabian peninsula having giant onshore Gas too?
Wall Street’s Big Coronavirus Mistake

Wall Street’s Big Coronavirus Mistake

The coronavirus has wreaked havoc…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

Why I Tripled My Volatility Index Short

It has been quite a hectic and frenetic day, so I am just getting around to writing out the logic behind today’s short cover of my November (VIX) $35 puts. Basically, I was betting that once the S&P 500 hit the first technical downside target at 1,065, a long overdue and furious short covering rally would ensue. This was when the (VIX) was trading just shy of $46.

This was not only an important Fibonacci level, it also showed up in the technical models of several different persuasions. Such a rally would cause the market volatility to plunge, (VIX) to collapse, and the $35 puts to soar.

By closing out my short $35 puts which I used to lower the cost of entry on the (VIX) bear put spread, but keeping the long side in the $40 puts, I was tripling my bet that volatility would fall. In options argot, I jacked up the delta on the position from 10% to 38%, making it much more sensitive to market movements, something you always want to do when a position is about to make a sharp turn in your favor.

That is exactly what we got. After covering my short, the (SPX) rocketed by 65 points, and the $35 puts squeezed up from $2.20 to $3.50, a pop of 59%. The long puts I kept jumped 42% from $4.80 to $6.80. The (VIX) went out today at $37.72, some $5 down from where I made my move. This enabled my Macro Millionaire virtual hedge fund to post a year to date gain of 40.87%, a new all-time high, and the first time over 40%. This is how it’s done.

I don’t know if any of you have noticed, but I have now posted 17 consecutive profitable trades for Macro Millionaire over the past two months, and I will be gunning for number 18 tomorrow. I don’t do this very often, but it has occurred before. I have been working my ass off trying to clock as many profitable trades as I can while trading conditions are ideal. Wait for crappy trading markets to take those extended European vacations, as I did earlier this summer.

It just so happens that my particular strategy and philosophy on risk control are ideally suited to these kinds of extreme, choppy conditions. It was a skill that I developed trading the horrific Japanese bear market of the nineties. I have been able to do this while many of the largest hedge funds have been put through a meat grinder, with Q3, 2011 stacking up as the worst in 15 years for the hedge fund industry.  I never was much of a joiner.

For those who wish to participate in Macro Millionaire, my highly innovative and successful trade mentoring program, please visit the following link:  Macro Millionaire

By. Mad Hedge Fund Trader


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News